Tourism plays a very important role in the economy by contributing to other economic
activities through multiplier effects. The objective of this paper is to analyse
the economic cycles of tourism and their linkages to the rest of economic system.
To this end, the authors formulate model which integrates the tourist life cycle
within the dynamic evolution of the economy. The model converges to stationary state
as cultural and environmental externalities evolve above the optimal social level.
The model leads to an econometric specification which is estimated with data from
the Canary Islands, a region dependent on tourism and environmental resources for
its development. The production cycle are strongly correlated with the tourist activity
and with the index of environmental deterioration, observing long run saturation
effect for some markets. However, the new cycles are reactivated by new origin markets,
compensating the negative effects experienced in the preceding cycles.